Monthly Archives: May 2019

On May 2, 2019, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued guidance entitled “A Framework for OFAC Compliance Commitments” (the “Framework”), that strongly encourages companies to “develop, implement, and routinely update” a risk-based sanctions compliance programs (“SCPs”). OFAC made clear that the guidance was intended for U.S. companies as well as non-U.S. companies that conduct business in or with the United States, with U.S. persons, or using U.S. origin goods or services. The guidance describes five “essential components” of an effective sanctions compliance program: (i) management commitment, (ii) risk assessment, (iii) internal controls, (iv) testing and audit, and (v) training.

In December of last year, Under Secretary of the Treasury for Terrorism and Financial Intelligence Sigal Mandelker previewed that OFAC would be issuing this guidance on the “hallmarks of an effective compliance program,” marking a new effort by Treasury to more clearly and comprehensively communicate its compliance expectations. OFAC Director Andrea Gacki explained that it was developed as part of OFAC’s continuing effort to strengthen sanctions compliance practices “across the board,” and “underlines [OFAC’s] commitment to engage with the private sector to further promote understanding of, and compliance with, sanctions requirements.” Consistent with OFAC’s Enforcement Guidelines, the Framework emphasizes that in the event of an OFAC enforcement action, the agency will consider favorably that a company had an effective SCP at the time of the apparent violation; it will also consider the Framework in evaluating a company’s remedial actions. The Framework also states that, in appropriate cases, it will consider the effectiveness of a company’s SCP at the time of the apparent violations in determining whether the apparent violations were “egregious” under OFAC’s Enforcement Guidelines.

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